If Madrid can make it to the knockout stages then they will stand a higher chance of winning the Champions League than any other team. I believe so because Madrid is a team that gets better as the season advances. We can clearly see how they've been getting better and learning to win games despite not being complete as the season advanced and I believe the same will be the case in the Champions League.
The knockout phase is a two-legged match; all they need to do is make sure you don't score much or win away from home.
With Vini and Camavinga fully fit and they don't experience any more injuries they can go all the way.
I can't state a favourite right now, so despite the fact that Liverpool have been incredible both in the league and champions league, I cant say they win the ucl because the season is still long and were a long way from the end.
I have no doubt about their knockout spot because now they are doing good job and their players are also feeling much better few bad weeks can't have impact on them for rest of their season mostly we have them off by many pundits, but they have done every time impressive and have fight back their win in last few games give indicator now they can give their best for having their spot into top ranks next game against Valencia on 4th January then we have their season could be started again.
Currently, they are having fair chance of winning few trophies while many are writing them off but never know when we have their best in coming rounds things could be much better and Mbappé confidence could be also improved with Vini and few more could be back into their best as they are suffering due to injuries, but they are surely coming back into business after this break.